10 EXPORT-IMPORT BANK OF WASHINGTON The Export-Import Bank of Washington is hereby authorized to make such expenditures within the limits of funds and borrowing authority available to such corporation, and in accord with law, and to make such contracts and commitments without regard to fiscal year limitations as provided by section 104 of the Government Corporation Control Act, as amended, as may be necessary in carrying out the program set forth in the budget for the current fiscal year for such corporation, except as hereinafter provided. (Foreign Assistance and Related Agencies Appropriation Act, 1965.) Public enterprise funds: Identification code 14 27 10 70 93 94 Program and Financing (in thousands of dollars)-Continued 72.47 72.98 74.47 74.98 90 1964 actual Cash transactions: -551,975 -372,500 17 Recovery of prior year obliga- spend public debt receipts...-2,824,760 -3,117,928 -2,425,746 New obligational authority. -63,297 -155,683 3,117,928 1965 estimate -343,168 -2,404 -2,371 -2.779 -87,813 -71,970 -120,250 1,699,040 -2,052,072 -701,784 -137,877 -200,493 -725,000 -700,000 -60,000 -30,951 -30,000 -120,000 1966 estimate 2,425,746 890,504 1,891,354 1,683,123 -1,233,672 -1,249,172 -1,215,494 642, 182 2,052,072 1,908,117 50,000 467,629 3,347,254 3,233 -3,347,254 -4,091,883 -3.233 -206,462 -645, 175 -480,229 EXPORT-IMPORT BANK OF WASHINGTON-Con. Public enterprise funds--Continued EXPORT-IMPORT BANK OF WASHINGTON FUND-Continued which may be issued on a fractional reserve basis. Although Congress enacted an increase of $2 billion in lending authority, it did not increase the Bank's authority to borrow from the U.S. Treasury. The Foreign Assistance Appropriation Act of 1964 provided that the Export-Import Bank could guarantee sales of U.S. goods and services to the U.S.S.R. and Eastern European countries only if the President determined such guarantees to be in the national interest. On February 4, 1964, President Johnson determined the sale of U.S. agricultural products to the Soviet Union, Poland, Czechoslovakia, Hungary, Rumania, and Bulgaria, and the sale of U.S. goods and services to Yugoslavia to be consistent with the national interest. Subsequently, the Bank has guaranteed sales of agricultural commodities to Hungary and Poland. The Bank's new program activity increased from $732 million in 1963 to $852 million in 1964, and is expected to increase further in 1965. As in past years, most Bank lending was in the form of equipment and service credits to foreign borrowers. Gross authorizations increased from $1,474 million in 1963 to $1,743 million in 1964, an increase of $269 million. Much of the increase was due to commodity loan and FCIA insurance authorizations. The following tables show the contemplated 1966 new program activity of the Bank, compared to the actual for 1964 and the estimate for 1965. Loan program....... ance.. In 1964 the Bank's receipts exceeded expenditures by Eximbank guarantees and on-shore insur$702 million. Three factors are mainly responsible. First, a growing volume of short- and medium-term loans akin to those made directly by the Bank in previous years are now being made by private credit sources under the Bank's program of guarantees to commercial banks or the re-insurance of policies issued by the Foreign Credit Insurance Association. Second, the Bank has been highly successful in selling its portfolio securities to commercial banks, thereby enlisting their participation in the financing of U.S. exports. Finally, the Bank has been receiving sizable prepayments from European governments on loans made for purposes of reconstruction shortly after World War II. Subtotal Less: Participations in authorizations issued during year.... Net loan authorizations............ Guarantees and insurance: Current charge to program 2 Subtotal, loans, guarantees, and in surance.. 1,350,060 570,170 30,972 177,150 1,186,120 770,000 900,000 1,000 1,000 82,000 82,000 300,000 100,000 778,292 1,153,000 1,083,000 -24.428 753,864 1,153,000 1,083,000 1966 estimate NEW PROGRAM ACTIVITY-Continued 793,288 1,190,913 1,117,468 Interest 3 and nonadministrative expenses. - Subtotal, program activity............... Total....... 1 Formerly titled "Long-term project and equipment authorizations." Represents charge of 25% to program activity and borrowing authority for new guarantees and insurance less cancellations and expirations. New guarantees and insurance were $964,185 thousand in 1964, and are estimated at $1,095,100 thousand in 1965 and $1,151,200 thousand in 1966. Includes interest due holders of portfolio certificates: 1964, $23,301 thousand; 1965, $39,316 thousand; and 1966, $54,151 thousand. RECAPITULATION OF GROSS AUTHORIZATIONS-LOANS, [Not taking into account expirations and cancellations or fractional reserves] 1964 actual 1965 estimate 1966 estimate 778,292 1,153,000 1,083,000 FCIA short-term insurance.... Total gross authorizations.. 851,551 1,253,201 1,186,120 3,242 3.965 4,052 854,793 1,257,166 1,190,172 Equipment and services... Exporter... 1965 estimate 1966 estimate 62,238 68,602 50 50 Subtotal... Total.. DATA ON NUMBERS OF NEW AUTHORIZATIONS 219,657 310,500 266,700 1.742,477 2,248,100 2,234,200 Total....... DATA ON OVERALL LOAN PROGRAM 1964 actual 1965 estimate 1966 estimate Loans transferred to guarantee program... 93.7 132.6 Loan disbursements, including disburse- Loan principal repayments Sale of portfolio certificates with recourse.. Loans outstanding, June 30: Loans and portfolio certificates sold with 2 recourse 73 3,348 3,421 2,210.2 1,153.0 73.0 130.7 121.3 523.2 313.7 83 3,732 3,815 175.9 .9 120.0 60.0 725.0 2,489.7 1,083.0 82.0 51.1 130.1 601.2 419.4 218.9 .9 30.0 31.0 700.0 2.706.3 2.186.6 831.8 1,440.0 3.538.1 3,626.6 1 Includes portion due holders of portfolio certificates. Includes loans sold with recourse as follows: 1964, $5.0 million: 1965. $64.1 million: 1966, $94.2 million. Equipment and services loans.-Equipment and service loans have been made in more than 80 countries of the free world. These loans have financed the purchase of U.S. goods and services and have assisted the economic development of the recipient countries through projects 1,826.4 1.951.1 3,777.5 DATA ON COMMODITY LOANS [In millions of dollars) Undisbursed loan authorizations, June Participations in authorizations. Loan disbursements.. Loan principal repayments.. Liquidation of agent bank loans.... Loans outstanding. June 30. 1964 actual 1965 estimate 175.0 177.1 52.9 9.3 .3 Loan principal repayments. Sale of loans without recourse Loans outstanding, June 30 4.1 131.8 82.0 73.0 10.0 2.2 40.0 DATA ON EMERGENCY LOANS [In millions of dollars] Undisbursed loan authorizations, June 30. 165.0 40.0 Emergency foreign trade loans. On occasion the Bank extends emergency loans to foreign governments experiencing shortages of foreign exchange to help such countries maintain their level of essential imports from the United States. Emergency loans may take the form of a line of credit to a foreign central bank or other financial institution to provide dollar exchange for a wide range of U.S. exports or to fund arrearages resulting from dollar exchange difficulties. No new authorizations of this type occurred in 1964. In 1965, however, $250 million has been authorized as part of the U.S. contribution in support of the British pound. 1966 estimate 108.1 82.0 53.7 60.0 880.9 82.0 12.0 1.7 10.0 33.3 16.7 1964 actual 1965 estimate 1966 estimate 454.6 519.5 300.0 100.0 15.0 55.4 60.6 7.7 317.1 994.7 Delinquent loans. As of June 30, 1964, protracted loan defaults aggregated $39.5 million ($22.7 million principal plus $16.8 million interest), involving five loans to Cuba, four to Bolivia, and two to Haiti. On these loans the total outstanding principal was $97.3 million. Of the Bank's $200 million of loans to mainland China authorized prior to 1947, all but $28.3 million has been repaid. The Republic of China resumed payment in 1961 on $2.3 million of loans, $1.9 million was outstanding on June 30, 1964. .1 35.0 70.8 845.1 In addition, there are minor delinquencies which, in the opinion of the Bank's Board of Directors, are attributable to routine delays or transitory exchange difficulties. On June 30, 1964, these delinquencies totaled $1.2 million of which $0.8 million was principal and $0.4 million was interest. On September 11, 1964, the Bank completed an agreement with the Government of Brazil to refund $92.5 million principal of debt due in 1964 and 1965. Of this total, $66.5 million consists of project and commercial supplier debt which the Bank will refund subject to comparable refunding by other creditor countries. Guarantees and insurance. In addition to making direct loans to finance purchase of U.S. goods and services for projects abroad, the Bank guarantees export loans made by commercial banks and offers export credit insurance through the FCIA on short- and medium-term transactions. Guarantees issued by Eximbank to commercial EXPORT-IMPORT BANK OF WASHINGTON-Con. Public enterprise funds-Continued EXPORT-IMPORT BANK OF WASHINGTON FUND-Continued banks enable U.S. exporters to obtain nonrecourse medium-term financing directly from their banks. Similarly, through an arrangement with Eximbank, the FCIA issues insurance policies directly to exporters throughout the country. The insurance programs permit an exporter to: (1) extend credit to his customers in other countries without fear that unforeseen adverse developments abroad will expose him to large losses; and (2) obtain credit more readily from U.S. commercial banks. In August 1964, both programs were modified to give more flexibility to FCIA and the commercial banks. Under the medium-term FCIA program and the guarantee program, the foreign buyer is required to make a partial payment in cash. Under both short- and mediumterm programs, the exporter is required to carry a portion of the political and commercial risks. Eximbank takes the remainder of the political risks and shares the commercial risks with FCIA or the commercial bank. Premium rates for both guarantees and insurance vary according to the country of destination and the term of the credit. The Bank's activity also includes insurance against war and expropriation risk on commodities, mainly cotton, which U.S. exporters hold abroad on consignment awaiting sale. Total new insurance and guarantee authorizations in 1966 are estimated at $1,151.2 million. These include $884.5 million new and renewed insurance policies issued by FCIA, and $263.7 million of guarantees to commercial banks. The net charge to lending authority for such transactions is computed at 25% of the increase in outstanding balances during the year, after allowing for cancellations and expirations. This net charge is expected to be $55.0 million in 1966. Private capital participation.-In 1964 the Bank continued to encourage further participation of U.S. commercial banks in its lending abroad. Following the pattern initiated by the establishment of the Series A Eximbank Portfolio Fund in 1962, and the Series B in 1963, the Bank established in 1964 a third fund, Series C, consisting of a pool of export paper held by it with maturcates ities falling due over a 7-year period. Portfolio certifiguaranteed by the Bank were sold to domestic commercial cates representing participations in the fund and banks in the amount of $372.5 million; as in 1963, the domestic offering was heavily oversubscribed. The total sold under the three series as of June 30, 1964, amounted to $922.5 million of which $95.7 million has been retired, leaving net outstanding of $826.8 million. In addition to the portfolio fund sales in 1964, there were sales of individual loan maturities of $63.3 million without recourse of which $62.4 million was sold abroad. certificates amounting to $725 million as well as approxiIn 1965 the Bank expects to sell additional portfolio mately $180 million of individual loan maturities. Portfolio sales of $700 million are projected for 1966. The Bank also continues its efforts to obtain the participation of commercial banks in its new loans. Administrative expenses. It is estimated that a limitation of $4.1 million will permit the Bank to carry out its programs in 1966. Operating results and financial condition.-The Bank is a Government-owned corporation in which the Treasury has invested $1 billion in capital stock. In addition, the Bank is authorized to borrow from the Treasury up to $6 billion as necessary to carry on its programs. The Bank pays interest on these borrowings, which is expected to amount to $11.4 million in 1966. In addition, interest on portfolio certificates is estimated at $56.6 million. For 1966, the Bank's net income is estimated to be $117.8 million. Of this sum, $50 million is expected to be paid as a dividend to the Treasury. It is planned to add the remaining $67.8 million to the Bank's retained earnings to provide for future contingencies. Total investment of the Government in the corporation is expected to be $2,064 million on June 30, 1966, comprising $1 billion in capital stock and $1,064 million of retained earnings. As of June 30, 1964, outstanding borrowings from the Treasury were $830 million and net retained earnings reserve was $880 million, after the 1964 dividend of $50 million. |
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